Ethanol is considered an attractive alternative transportation fuel that may be used as an additive to, a supplement to or a part replacement for the fossil fuel gasoline, which is an ultimately limited resource.
Ethanol may be used in smaller concentrations instead of Methyl tert-butyl ether (MTBE) as a cleaner octane booster or oxygenating additive to gasoline, or it may be used for blending into gasoline in higher amounts from 10 to 85%, where the mixtures can be used in only slightly modified automobile engines as we know them today. It therefore has a tremendous advantage over other alternative transportation fuels. Any fractional substitution can be done with maximum flexibility, and this without drastic changes in transportation engine technology as we know it today.
Ethanol has the advantage of being a renewable resource, as it can be produced in very large amounts from plant material. From this also follows the advantage of having a low net contribution to the release of carbon dioxide to the atmosphere as the carbon dioxide released by the use of the ethanol is reabsorbed by the necessary production of the plant material to regenerate the used ethanol.
In traditional ethanol production by fermentation, the plant material used is 6-carbon sugar, either directly extracted from plants containing free monosaccharides or disaccharides, or generated by the hydrolysis of starch from starch containing plant parts. These sugars are from plant parts that are also used for human or for animal consumption. Traditional ethanol production is, therefore, competing directly for plant material which would otherwise be used for food or feed. The conversion of food into fuel raises ethical concerns in a world where millions of people are starving; calculations show that the amount of corn necessary to produce a tank-full of fuel for one very common off-roader type car in the USA is approximately the amount needed to feed one otherwise starving person for one full year.
An alternative solution is to use lignocellulosic plant material that is otherwise regarded as waste for generation of energy and fuel. This is, in general, regarded in a very positive way, and the development of ways to use lignocellulosic plant material for ethanol production has, therefore, in many countries attracted strong support, both politically and by the general public. Another advantage is the abundance of lignocellulosic material, actually making the substitution of 50% or more of the current gasoline consumption with ethanol theoretically feasible.
There are numerous sources of lignocellulosic material that may be used for ethanol production—provided that an efficient and economical collection and conversion process can be established. A few examples, where the collection is already being done today, include sugar cane bagasse, wood chips, corn stover and wheat straw.
The two primary technical problems encountered in the use of lignocellulosic material for ethanol production through fermentation are:                1. the difficulties in hydrolysing the 6-carbon sugar containing cellulose into glucose without generating side-products that hamper or prevent further microbial conversion of the glucose into ethanol; and        2. the lack of an organism that is capable of efficient conversion of 5-carbon sugars (e.g. xylose and arabinose) present in the hemicellulose part of the lignocellulosic material into ethanol.        
Saccharomyces cerevisiae has for more than 6000 years been the preferred microorganism for conversion of 6-carbon sugars derived from plant material into ethanol. This is due to a favourable combination of high ethanol yield, high specific productivity and high ethanol tolerance together with the ability to grow and ferment at low pH, where other competing microorganisms have trouble just surviving. When the difficulties in cellulose hydrolysis has been overcome, then S. cerevisiae will most likely continue to be the preferred organism to be used for generating ethanol by fermentation of the released 6-carbon sugar monomers. But, unfortunately, S. cerevisiae is unable to metabolize 5-carbon sugars that constitute up to one-third of the lignocellulosic sugar material.
Work has consequently been made during the last two decades to seek ways to genetically engineer S. cerevisiae in order to introduce 5-carbon sugar fermenting capacity. This work has primarily focused on xylose fermentation, as xylose constitutes the dominant part of 5-carbon sugars in lignocellulose. Although S. cerevisiae cannot metabolize xylose, it is capable of metabolizing the isomer xylulose (Wang and Schneider, 1980), which is the metabolite constituting an entry point into the pentose phosphate pathway. So in principle, the problem can be solved by providing S. cerevisiae with the ability to convert xylose into xylulose.
Two different, existing biochemical pathways have been successfully introduced into S. cerevisiae in order to channel xylose into the pentose phosphate pathway through xylulose. In natural xylose-metabolizing fungi, xylose is converted into xylulose in a two-step process (see FIG. 1). Xylose is first reduced to xylitol by a xylose reductase (XR-EC 1.1.1.21). Xylitol is then dehydrogenated to xylulose by xylitol dehydrogenase (XDH-EC 1.1.1.9). The reductase and the dehydrogenase are not present in S. cerevisiae, but it has been possible to transfer and express genes encoding those two enzymes from Pichia stipitis into S. cerevisiae, and the resulting, modified S. cerevisiae strain is able to metabolize xylose.
The activity of the two enzymes requires NADPH and NAD+ and generates NADP+ and NADH, so it is necessary for the organism to regenerate the NAD+-NADH and the NADP+-NADPH balance by redox processes elsewhere in the metabolism, otherwise the xylose metabolism will cease to function when NADPH and NAD+ has been depleted. A fairly low rate of xylose metabolism and the generation of significant amounts of xylitol by S. cerevisiae strains modified this way has been attributed to this inherent problem in the xylose reductase-xylitol dehydrogenase pathway.
In xylose metabolizing bacteria, conversion of xylose into xylulose is different: a single enzyme, xylose isomerase (EC 5.3.1.5), converts xylose directly into xylulose (see FIG. 1). This appears to be simpler, and it does not generate the NAD+-NADPH imbalance as mentioned above. It was therefore also the first strategy to be proposed for conferring xylose metabolism ability into S. cerevisiae. But it has proven difficult to make this strategy work. Expression of most xylose isomerase genes from bacteria does not result in the presence of an active xylose isomerase in S. cerevisiae, and the exact reason for this is still not known. Various studies have revealed that often a protein produced from expression of a bacterial gene can be detected, but the expressed protein apparently fails to fold into an active enzyme in S. cerevisiae. 
Heat stable enzymes are often also more stable in other types of extreme conditions, such as high salt and extreme pH values. This may indicate that heat stable enzymes are more likely to maintain (and probably also to obtain) a correct fold. And it has indeed been possible to find examples of bacterial xylose isomerase genes isolated from thermophilic organisms that express active xylose isomerases in S. cerevisiae (see: Walfridsson et al, 1996; and Bao et al, 1999). These genes have been shown to enable S. cerevisiae to metabolize xylose, but at a very low rate. The low rate has been attributed to the fact that the heat-stable xylose isomerases has an optimal activity at 80-90° C. but the temperatures that permit the survival of most S. cerevisiae strains are 30-35° C.